Xbox account profile image Not showing

This is working as intended per the changelog:

Added a new Minecraft Profile Pic. This icon is a snapshot of your character's appearance. The new Minecraft Profile Pic replaces your Xbox Gamerpic on all screens, including Profile, lists of players, and on Realms.

https://feedback.minecraft.net/hc/en-us/articles/39932063411213-Minecraft-Bedrock-Edition-1-21-111-The-Copper-Age

Note that only Marketplace skins and Character Creator skins are supported at this time, so if you have a custom skin equipped, one of the default skins or your previously equipped Marketplace/Character Creator skin will be shown instead. This is being tracked at MCPE-189765.